Your Tax Break Starts Here
By Dana Sadarangani
Beginning in January 2018, there was a lot of product left over before California legalized recreational cannabis.
Companies raced to grow and extract as much as they could until January 1, 2018, when the market expanded from medical-use patients to all adults. However, some dispensaries didn’t sell all the non-compliant marijuana before July 1, 2018, which marked the end of a six-month grace period to sell products that don’t meet testing, packaging, and contents. This meant there were deeply discounted cannabis sales, as much as a penny, to get rid of all stock prior to January.
Sometimes cannabis must be destroyed because it hasn’t been tested for chemicals and contaminants. Other reasons for destroying cannabis includes mislabeled products, not having child-resistant packaging or worse, more THC than permitted under state rules. Due to these reasons, only 21% tested are state regulated, making 79% of all cannabis non-compliant.
Per 280E, the businesses can deduct only the cost of goods sold (COGS). If you recorded your books correctly you can analyze and see where deductions can be made for all unsold and products that needed to be trashed.
Warning: don’t go dumpster diving. There have been necessary precautions taken with products thrown in the trash.
G E T M O R E from your thrown products.